Customer after customer did a double take as they walked into the Otsego SuperTarget, surprised to find an entrance just inside the store to a small, brightly lit second shop filled with bottles of chardonnay, pilsners and spirits.

Target Corp. announced in June it would soon open its first liquor shop in Minnesota in more than 40 years. And it opened the store quietly on Wednesday. For much of the afternoon, more employees than customers gathered around the cash terminals.

Gail Talbot of Zimmerman was surprised and pleased as she shopped for wine on Wednesday. “I like the convenience. I can get it all done in one stop,” she said.

It’s a concept that seems simple enough — picking up a bottle of wine along with a few groceries and paper towels — and Target customers in 37 states, including Wisconsin, can do just that.

But Minnesotans have generally had to settle for low-alcohol choices, such as 3.2 beer, in supermarkets and discounters. The state’s strict liquor laws with separate entrance requirements and no Sunday sales have long presented challenges.

Retailers such as Cub, Rainbow, Lunds/Byerly’s, Sam’s Club and Costco sell liquor in stores with separate entrances. Target and Wal-Mart have resisted, although the Arkansas based retailer does sell liquor at some Sam’s Clubs. Asked whether Wal-Mart stores in Minnesota might also start selling liquor, Wal-Mart spokeswoman Delia Garcia said in a statement that it has no new projects in Minnesota to announce.

Leila Navidi, Dml - Star Tribune Special To The Star Tribune

At the Super Target in Otsego, there is a separate entrance for alcohol sales at the new wine and spirits shop.

Analysts believe that Target’s entry into liquor is a way to get shoppers to stop by more often. It’s a logical extension of the company’s PFresh initiative, which encourages customers to come in to the store more frequently for perishables and leave with a cart full of other items.

The Minneapolis-based retailer has been getting requests to sell alcohol from customers for many years, said spokeswoman Jill Hornbacher. The new store is considered to be a pilot and Target has not said whether others are planned in the state. “We’ll look at sales and traffic before we decide,” Hornbacher said.

One of the reasons that Target chose Otsego, about 35 miles northwest of Minneapolis, was the regional office space next to the store that could easily be converted to a separate entrance without sacrificing any selling space, said Hornbacher. In other existing locations, Target would have to spend heavily to build separate entrances and, in the process, sacrifice other goods to make space.

While most customers welcomed the new addition, others felt that Otsego’s 14,000 residents are already well-served by the existing four liquor stores.

“It’s first come, first served,” said Steve Johnston of Ramsey. “I look at who was here first, before Target. I like independent shops.”

Doug Andrews, who owns Napa Valley Liquors about 300 yards from the new Target liquor store in the same strip mall, thinks the Otsego’s City Council was too quick to approve another liquor license in the city. “I don’t blame Target,” he said, but added, “If Maple Grove can tell Hy-Vee it has too many grocery stores, maybe Otsego ought to be saying we have enough liquor stores.”

Maple Grove officials last week urged a developer to redo plans for a mixed-use development that included a Hy-Vee grocery, citing its proximity to existing grocers.

Target’s 1,600-square-foot liquor store is about one-third smaller than Andrews’ shop, but he’s already responded to the new competitor by lowering prices on 25 items to remain competitive. “I think we’ll all be fine, but time will tell,” he said.

Target has been selling wine, beer and spirits in other markets since 1996 and now offers them in 1,300 of its 1,800 locations nationwide. It opened a liquor store in North St. Paul in 1971 that later closed. The company’s attempts to obtain liquor licenses in the early 1970s in West St. Paul and Bloomington were denied.

John Ewoldt is a business reporter for the Star Tribune. He writes about small and large retailers including supermarkets, restaurants, consumer issues and trends, and personal finance.

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